THE European Commission launched this Thursday a formal sanctions file against the Chinese e-commerce giant Temu considering that he could have violated the Digital Services Act in areas such as the sale of illegal products (such as drugs, chemicals or toys), the potentially addictive design of the service, the systems it uses to recommend purchases to users or the denial of access to its data to researchers.
If Brussels’ suspicions prove true, the company faces fines which could reach 6% of their overall annual turnover compared to the previous year. Temu has been classified as a large digital platform in the EU as it reports 92 million active monthly users as of September 2024. A designation that requires it to assess and mitigate systemic risks that may arise from its services.
“We want to ensure that Temu complies with the Digital Services Act. In particular, ensuring that products sold on your platform meet EU standards and do not present any danger to consumers. Our action will ensure a level playing field and ensure that all platforms, including Temu, fully respect the laws that keep our European market safe and fair for all,” said the Commission Executive Vice-President. Margrethe Vestager.
The decision by the Community executive to open a sanction procedure comes after the preliminary analysis of the risk assessment report that Temu sent to Brussels at the end of September 2024, as well as responses to formal requests for information from the Commission in June. October 28 and 11, 2024. Vestager also took into account information sent by national authorities or complaints from consumer organizations.
The Brussels investigation will focus in particular on the systems that Temu has put in place to limit the sale of illegal products and block the presence of dishonest traders on its platform. Another area of concern concerns the risks linked to the addictive design of the service, in particular game-like reward programs.
The community executive also believes that Temu may not respect its transparency obligations regarding the main parameters used in their recommendation systemsas well as the obligation to give researchers access to their public data.
After the formal opening of the procedure, the Commission will continue to collect evidence, for example by sending requests for additional information or carrying out interviews and inspections. Launch of the sanction file It also empowers Brussels to adopt precautionary measures and non-compliance decisions.. The Community Executive could also reach an agreement with Temu to correct the problems detected without sanction.
The Digital Services Act does not set any legal deadline for concluding the file. The duration of an in-depth investigation depends on a number of factors, including the complexity of the case, the degree of cooperation of the company concerned with the Commission and the exercise of the rights of defence.
